Everyone wants good financial advice, but readers often wonder where they can find it.
Older readers are interested in comprehensive plans that include investment management and help with such things as wills and inheritances. Younger readers want to how to get started and what should come first.
Both groups are asking pretty much the same questions.
A recent column looked at why it’s important to ask how your advisor is paid. How they respond to the question is as important as the answer itself.
That article prompted an email from C.M, who is leaving his financial institution of 30 years over this issue.
He’d been happy with his relationship, but when his adviser died suddenly, his file was passed to a person “in whom we do not have the same confidence,” he wrote.
He’s met with his new adviser twice in two years. C.M. was concerned about fees, and asked for something in writing to explain how they are calculated in advance of a recent meeting.
“The meeting was a joke,” he says. “She dissembled so much that we still have no idea.”
C.M. is so turned off, he’s leaving and looking for a fee-only planner to assess his needs. He likes the fee-only idea because such a planner gets a flat fee for advice, but no commission for suggesting which stocks or funds to buy, making the advice more impartial.
Fee-only advice eliminates a source of conflict, but it’s expensive, and many people can’t afford it. A full financial plan costs between $2,500 and $7,500 depending on the depth of service provided.
So many people turn to their bank, a good place to go for basic information. The advice is free and you may be referred to a wealth manager, as C.M. was.
A wealth manager has expertise, but since the big banks all own brokerages and generate fees through them, these experts often recommend company products such as mutual funds, stocks or insurance. These may or may not be the best or cheapest out there.
Here are some common questions about getting help:
Where can I find advice?
You can find a list of advisers with the Certified Financial Planner (CFP) designation on the web site of the Financial Planning Standards Council (FPSC). The FPSC is a not-for-profit organization that oversees standards of advisers with a CFP designation. The designation tells you that the advisor has taken courses, passed an exam, has some ethics training and is maintaining his or her licence through on-going training.
The web site of Advocis, the Financial Advisors Association of Canada, has a list of its members. The difference between Advocis and CFP: many Advocis advisers do not have a CFP designation.
Try asking a friend who they use, but listen critically to the reasons for a recommendation.
How do I pick an adviser?
Be clear about why you want one at all.
“Why are you reaching out?” says Cary List, CEO of the Financial Planning Standards Council. “People who seek financial advice usually want help to simplify issues; a road map and sense of the bigger picture.”
Select two or more planners, make appointments, and sit down for a free consultation. Be prepared to talk about your goals, the state of your finances and your expectations. Have numbers handy. It helps to visit web sites beforehand to get a feel for the adviser’s thinking.
Be a careful observer. What’s the first thing the adviser says? Is it about their services and products, or do they ask why you’re there?
“It’s a good sign if the first question is: ‘Why are you here?’ ” List says. “That means they are focusing on you.”
What questions do I ask?
The CFPC site has a list of 10 key interview questions. It includes such things as qualifications, experience and fees charged.
Others include how the planner is regulated and what products they are licenses to ell: stocks and mutual funds, or insurance as well.
The Advocis site also has a consumer guide with a list of questions.
In the end the choice comes down to how comfortable you are with the person and their philosophy. It’s a big decision, so the more research you do the better.